How does student debt impact higher education in Australia? Mainly through demand and course choice: the HELP system defers the cost of study, which sustains enrolment, while the size of the eventual debt and the terms of repayment steer students toward shorter courses, cheaper providers and fields with a clear return. For private providers the impact runs through FEE-HELP access, which decides whether a course competes on a deferred-payment footing or an upfront one.
This article looks at how HELP debt shapes what students choose and what providers build, what FEE-HELP access requires of a private provider, and what the 2024 and 2025 policy changes mean in practice. It draws on fifteen years of TEQSA registration and strategy work with private providers.
What the recent policy changes did
Two pieces of legislation have changed the debt picture in the past two years. The Universities Accord (Student Support and Other Measures) Act 2024 capped HELP indexation at the lower of the Consumer Price Index and the Wage Price Index, backdated to 1 June 2023. The Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025 then reduced every HELP and other student loan balance by 20 per cent as at 1 June 2025, which the Government described as removing close to $16 billion of debt for more than three million people.
The same 2025 legislation raised the minimum repayment threshold from $54,435 to $67,000 for 2025–26 and moved compulsory repayments to a marginal system, so that a graduate now repays 15 cents in each dollar of income over the threshold rather than a percentage of total income. For 2026–27 the threshold is $69,528, according to the Australian Taxation Office's study and training loan rates. The average HELP debt before the 20 per cent cut was around $27,600.
How does student debt impact higher education demand?
The deferred nature of HELP is what makes Australian higher education demand resilient. A student who can borrow the full tuition amount at no real interest and repay only above a threshold faces no cash barrier at enrolment. That is why domestic demand has held up through periods when fees rose.
What the debt does affect, in my experience, is the margin of choice. Students who are conscious of the balance they will carry choose shorter courses, take fewer elective years, and prefer fields where a graduate salary clears the repayment threshold quickly. The 2025 changes soften that pressure but do not remove it. Our earlier article on student debt in Australian higher education traces how the balance grew to the point where a 20 per cent cut became politically necessary.
How debt shapes course choice
The course-level effect is visible in the fields that private providers succeed in. Business, information technology, health, education and the creative industries dominate because their graduates can see a path to repayment, and because the courses can be delivered at three years or less. Fields where the debt-to-earnings relationship is poor struggle regardless of quality.
There is a second effect on course design. Students carrying debt are intolerant of poor progression, because a failed unit is money borrowed for nothing. That makes the standards on admission, orientation and progression in Domain 1 of the Threshold Standards a commercial matter as well as a regulatory one. A provider that admits students who cannot succeed generates debt without graduates, and TEQSA reads attrition and completion data at renewal. The policy background is in our article on the impact of politics and policy on higher education.
FEE-HELP access for private providers
A private higher education provider cannot offer FEE-HELP simply by being registered with TEQSA. Approval as a higher education provider under the Higher Education Support Act 2003 is a separate process administered by the Department of Education, with its own financial viability, governance and quality requirements, and it is available only for accredited courses. Until that approval is in place, a private provider competes with FEE-HELP-approved rivals on an upfront-fee basis, which in most markets is a decisive disadvantage.
My advice to new providers is to plan the FEE-HELP application from the day TEQSA registration is granted, and to model the pre-approval period honestly. A provider without FEE-HELP is limited to employer-funded students, international students once CRICOS is in place, and the few domestic students who can pay upfront. A loan fee applies to FEE-HELP loans for undergraduate courses at most non-university providers, which adds to the student's balance and should be disclosed clearly under Standard 7.1.
What the changes mean for provider strategy
The 20 per cent cut and the higher threshold reduce the cost of a degree to the graduate without changing what the provider receives. They therefore make deferred-fee study relatively more attractive and upfront study relatively less, which sharpens the case for FEE-HELP approval. They also lower the political temperature around student debt, which our note on no change to student loan tax policy discussed in a different context.
For a board, the strategic questions are whether the provider's courses sit in fields where graduates will clear the new thresholds, whether FEE-HELP approval is in place or planned, and whether progression data supports the claim that students who borrow will graduate. Those are the questions a student is implicitly asking.
My reading of the student debt picture
Student debt has not deterred Australians from higher education, and the 2025 changes make it less likely to. What it has done is make students sharper judges of value, and that is the real student debt impact higher education providers should plan around. A provider whose courses lead to employment, whose students progress, and whose fees are deferrable will do well. One that relies on enrolment without completion will find that the debt its students carry becomes the evidence against it.
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Frequently asked questions
What was the 20 per cent student debt cut?
The Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025 reduced all HELP and other student loan balances by 20 per cent as at 1 June 2025, removing close to $16 billion of debt for more than three million people according to the Government.
What is the HELP repayment threshold now?
For 2025–26 the threshold rose to $67,000, with repayments of 15 cents in each dollar above it under a marginal system. For 2026–27 the threshold is $69,528.
Can a private higher education provider offer FEE-HELP?
Only after approval under the Higher Education Support Act 2003, which is separate from TEQSA registration and applies to accredited courses. Until approved, a private provider must charge fees upfront.
How is HELP debt indexed now?
Since legislation passed in 2024, indexation is capped at the lower of the Consumer Price Index and the Wage Price Index, backdated to 1 June 2023.
Dr Brendan Moloney is CEO of Darlo Higher Education, Australia's largest specialist TEQSA consultancy. He holds a PhD from the University of Melbourne, is a Cambridge University Press author on governance in higher education, and has advised private providers on registration and course accreditation for more than fifteen years.